When you decide to get a car, you will likely consider buying or leasing. Both buying and leasing have their advantages and disadvantages but seeing that a sizable percentage of people prefer leasing to buying, it is likely that you are in this camp. In this article, we will explore the reasons why you should or should not lease a car.
Low Monthly Payments
A typical lease will often attract a lower monthly cost than you pay if you decided to buy the same car. This is because the amount you pay on the lease will take into account the car’s depreciation over the lease period. These calculations do not come into play when buying a car.
Lots of Options
Another advantage is that you get to drive better cars and a lot more expensive ones than you otherwise would have if you decided to purchase a car. Additionally, you can get a new car every time you need to lease a new car. This affords you the added advantage of getting to drive the latest models if they are available at the time of leasing.
No Resale Process
If you hate haggling or would not like to go through the resale process, a lease is a better option for you. If you buy the car you will have to deal with dealerships or private buyers when you decide to sell the car or trade it in for a newer or better model.
One of the biggest advantages of leasing a car is that you do not gain any equity from it. This is because you have to return the car at the end of your lease. While you will make monthly payments on the car, the arrangement is more like renting an apartment than it is paying a mortgage on a house.
In addition to not building equity in the car, there are some long-term considerations to make. One of these is the acquisition fee. This fee is separate from the amount you pay for the lease and because it might be somewhat high, you might want to put that payment towards buying a new car.
It is also like that you will incur some fees while returning the car. These include fees for wear and tear on the car as well as charges for exceeding the mileage limit. If you modified the car in any way during your lease, you might also have to undo these modifications and return the car as it was leased to you.
Many people who want to avoid all this hassle turn to companies that buy out leases. In these cases, a third party will buy the car at the trade-in value and then pay the leasing company the amount that remains on your lease. Businesses like We Buy Exotics make it easy to sell leased car with a fifth of car enthusiasts aware of this strategy to avoid fees and other complications when they return the leased car.
Leasing a car is a viable option for people who would not want to buy a car but still need one for their daily use. While leasing gives you a larger pool of cars to choose from as well as lower monthly costs, you need to think about other aspects of leasing such as having to return the car once the lease is over as well as the costs and complexities you might have to deal with when you return the car.